Measuring the energy savings from home improvement investments: evidence from monthly billing data
TLDR
In this paper, the authors explore one possible explanation for the energy paradox: realized returns fall short of the returns promised by engineers and product manufacturers, and conclude that the case for energy paradox is weaker than has previously been believed.Abstract:
An important factor driving energy policy over the past two decades has been the “energy paradox,” the perception that consumers apply unreasonably high hurdle rates to energy-saving investments. We explore one possible explanation for this apparent puzzle: that realized returns fall short of the returns promised by engineers and product manufacturers. Using a unique data set, we find that the realized return to attic insulation is statistically significant, but the median estimate (9.7%) is almost identical to a discount rate for this investment implied by a CAPM analysis. We conclude that the case for the energy paradox is weaker than has previously been believed.read more
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Environmental policy and technological change
TL;DR: The relationship between technological change and environmental policy has received increasing attention from scholars and policy makers alike over the past ten years as discussed by the authors, partly because the environmental impacts of social activity are significantly affected by technological change, and partly because environmental policy interventions themselves create new constraints and incentives that affect the process of technological developments.
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Energy efficiency: economics and policy
Pedro Linares,Xavier Labandeira +1 more
TL;DR: In this paper, the authors discuss the factors that influence energy efficiency and conservation decisions, and the most appropriate policies for their promotion, and argue that specific policies for promoting energy conservation may be required, preferably based on economic instruments or on the provision of information to consumers.
ReportDOI
Technological change and the environment
TL;DR: In this article, the authors summarized current thinking on technological change in the broader economics literature, surveys the growing economic literature on the interaction between technology and the environment, and explores the normative implications of these analyses.
Journal ArticleDOI
Energy Efficiency Economics and Policy
TL;DR: The authors provide an economic perspective on the range of market barriers, market failures, and behavioral failures that have been cited in the energy efficiency context and assess the extent to which these conditions provide a motivation for policy intervention in energy-using product markets, including an examination of the evidence on policy effectiveness and cost.
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Is There an Energy Efficiency Gap
Hunt Allcott,Michael Greenstone +1 more
TL;DR: In this article, the authors present a simple model of investment in energy-using capital stock with two types of market failures: first, uninternalized externalities from energy consumption, and second, forces such as imperfect information that cause consumers and firms not to exploit privately-profitable energy efficiency investments.
References
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Book
Investment Under Uncertainty
Avinash Dixit,Robert S. Pindyck +1 more
TL;DR: In this article, Dixit and Pindyck provide the first detailed exposition of a new theoretical approach to the capital investment decisions of firms, stressing the irreversibility of most investment decisions, and the ongoing uncertainty of the economic environment in which these decisions are made.
Journal ArticleDOI
An Econometric Analysis of Residential Electric Appliance Holdings and Consumption
Jeffrey A. Dubin,Daniel McFadden +1 more
TL;DR: In this paper, the authors used a subsample of the 1975 survey of 3249 households carried out by the Washington Center for Metropolitan Studies (WCMS) for the Federal Energy Administration for the purpose of testing the statistical exogeneity of appliance dummy variables typically included in demand for electricity equations.
Journal ArticleDOI
Individual Discount Rates and the Purchase and Utilization of Energy-Using Durables
TL;DR: In this article, a model of individual behavior in the purchase and utilization of energy-using durables is presented, where the tradeoff between capital costs for more energy efficient appliances and operating costs for the appliances is emphasized.
Posted Content
The Equity Premium: It's Still a Puzzle
John Y. Campbell,Dean Corbae,John Heaton,Mark Huggett,Beth In,John Kennan,Deborah Lucas,Barbara McCutcheon,Rajnish Mehra +8 more
TL;DR: In this paper, the authors discuss and assess various theoretical attempts to explain these two different empirical phenomena: the large "equity premium" and the low "risk free rate" and show that while there are several plausible explanations for the low level of Treasury returns, the large equity premium is still largely a mystery to economists.
Posted Content
The Equity Premium: It's Still a Puzzle
TL;DR: The authors examines the literature that attempts to resolve the equity premium and risk free rate puzzles, and demonstrates that the puzzles will confront any model of asset prices that relies on three crucial assumptions: preferences have a particular parametric form, asset markets are complete, and asset trade is frictionless.
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